Eleven Consumers Are Trying to Decide Whether to Connect to a New

question 13

Multiple Choice

Eleven consumers are trying to decide whether to connect to a new communications network.Consumer 1 is of type 1, consumer 2 is of type 2, consumer 3 is of type 3, and so on.Where k is the number of consumers connected to the network (including oneself) , a consumer of type n has a willingness to pay to belong to this network equal to k times n.What is the highest price at which 9 consumers could all connect to the network and either make a profit or at least break even?

• A)$30
• B)$9
• C)$18
• D)$24
• E)$27

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Definitions:

Raw Materials

The basic materials that are processed or used in the manufacturing of goods, constituting the initial inputs in production.

Direct Costs

Expenses that can be directly traced to producing a specific good or service, such as raw materials and direct labor.

Indirect Costs

Costs that are not directly traceable to a specific product or service but are necessary for the business's overall operation.

Cost Object

An item for which costs are separately measured and assigned, such as a product, service, project, or customer.